USDA to Release Crop, S&D Reports on Schedule Despite Delay Request

November 8, 2011 12:16 AM
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via a special arrangement with Informa Economics, Inc.

Firm linked with MF Global situation requested delay

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

USDA’s November Crop Production and Supply/Demand reports won’t be delayed until November 14 as had been requested by the firm RJ O’Brien, as the company said the extra time was needed relative to potential market volatility from the reports and the shifts in accounts for former MF Global customers.

Citing price fluctuations that can take place as markets react to USDA production or demand numbers, RJ O'Brien Chief Executive Gerald Corcoran said in a letter to USDA Secretary Tom Vilsack that the report should be delayed. “This recommendation is intended to reduce price volatility until MF Global client transfers to their designated FCMs (Futures Commission Merchants) are fully operation and thus better equipped to manage risk triggered by changes in the USDA’s supply/demand updates,” Corcoran said. “The situation is exacerbated by the limited funds that the MFG bankruptcy trustee has released to each client's designated FCM.”

Noting that USDA reports have been delayed before by weather such as blizzards, Cocoran argued a delay is not unprecedented. Releasing the report later “would allow farmers, end-users, commodity trading advisers and other market participants more time to properly fund MF Global accounts transferred to new brokers,” he said.

Contacts at USDA’s National Ag Statistics Service (NASS) confirmed that they had not been directly asked to delay the reports, but that the request had been made to USDA’s Vilsack.

Errant market chatter also had the request coming from the CME and/or the Commodity Futures Trading Commission, not the private firm that eventually was discovered to be the one making the request. However, the request was not granted. “USDA will release Wednesday’s reports as scheduled,” said a spokesman.

Comments: The delay request certainly did put an unusual factor into the coming USDA reports, although the Agriculture Department opting to move ahead with the data is the appropriate move for several reasons. While the concerns about market volatility do have some merit, the MF Global situation can’t quite be likened to a blizzard which paralyzes Washington, DC, and closes down the federal government for several days. The MF Global situation is a blizzard for some, but not to the degree that market-sensitive data needs to be delayed to accommodate the clean up of the bankruptcy. The real issue here is why the CFTC was unable to help avoid the MF Global situation.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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